. Daily FX Analysis - GBP Dips, EUR Peaks, NZD Soars, USD Falters

Daily FX Analysis – GBP Dips, EUR Peaks, NZD Soars, USD Falters

Daily FX Analysis – GBP Dips, EUR Peaks, NZD Soars, USD Falters

20 Nov 2023

Introduction:

In the currency markets, GBP/USD struggles to break above 1.2500, impacted by cautious market sentiment and expectations of a dovish Bank of England stance. Meanwhile, EUR/USD maintains gains above 1.0900 amid a weakening US Dollar. NZD/USD sees upward movement post-China’s interest rate decision, while USD/CHF faces downward pressure below 0.8850 on concerns about a cooling US labor market. The focus turns to FOMC minutes and Swiss trade data for further market insights.

GBP/USD:

GBP/USD upside remains capped below 1.2500.

The GBP/USD is retracting its advances following a rejection at 1.2500 during the early European session on Monday. The pair’s upward movement is backed by a weakened USD and decreased yields in US Treasury bonds. Nevertheless, the pair’s gains are being limited by a prudent market atmosphere and expectations of a dovish stance from the Bank of England.

Following a day of closing with minimal change, just above 1.2400, GBP/USD experienced a slight upward movement during the European session on Friday.

Should risk flows take control of the financial markets during the latter part of the day, GBP/USD may see an increase in the gains recorded earlier this week.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.2457 | Positive Crossover | Bullish
  • MA 20: 1.2392 | Positive Crossover | Bullish
  • MA 50: 1.2317 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.2449 | Negative Crossover | Bearish
  • MA 20: 1.2371 | Positive Crossover | Bullish
  • MA 50: 1.2284| Positive Crossover | Bullish

RSI (Relative Strength Index): 67.04| Buy Zone | Bullish

Stochastic Oscillator: 53.76| Buy Zone | Positive

Resistance And Support Levels:

  • R1: 1.2494| R2: 1.2677
  • S1: 1.2364| S2: 1.2219

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.2539 | Take Profit: 1.2677 | Stop Loss: 1.2452

EUR/USD:

EUR/USD hold gains above 1.0900 amid sustained US Dollar weakness.

EUR/USD is consolidating at levels above 1.0900 during the European morning, maintaining its position near three-month highs. The pair is benefiting from a prolonged decline in the US Dollar, driven by growing expectations of Federal Reserve rate cuts in the coming year.

The pair appears to be nearing the immediate resistance near the significant level of 1.0950, driven by pressure on the US Dollar (USD) due to increasing expectations that the Federal Reserve (Fed) will bring its interest rate-hike cycle to a close.

Technical indicators indicate a heightened momentum, with bulls potentially setting their sights on reaching the high of August at 1.1064.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1.0898| Positive Crossover | Bullish
  • MA 20: 1.0822| Positive Crossover | Bullish
  • MA 50: 1.0738 | Positive Crossover | Bullish

Simple:

  • MA 5: 1.0893 | Positive Crossover | Bullish
  • MA 20: 1.0803 | Positive Crossover | Bullish
  • MA 50: 1.0706 | Positive Crossover | Bullish

RSI (Relative Strength Index): 72.06| Buy Zone | Bullish

Stochastic Oscillator: 82.41| Buy zone | Positive

Resistance And Support Levels:

  • R1: 1.0926| R2: 1.1046
  • S1: 1.0832| S2: 1.0752

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 1.0948| Take Profit: 1.1046 | Stop Loss: 1.0889

NZD/USD:

NZD/USD moves higher near 0.6020 as PBoC keeps LPR Unchanged.

NZD/USD continues its upward trend above 0.6000 following China’s decision on interest rates. The Kiwi Producer Price Index (PPI) data raises uncertainties about the possibility of a rate hike. The People’s Bank of China (PBoC) has maintained the benchmark rates at 3.45%.

During Monday’s Asian session, the NZD/USD pair is trading at an elevated level around 0.6020, marking its second consecutive session of gains.


The NZD/USD is getting a boost in the upward direction after China’s decision on interest rates. The People’s Bank of China (PBoC) has chosen to maintain its loan prime rate (LPR) at 3.45%, consistent with predictions.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.6005 | Positive Crossover | Bullish
  • MA 20: 0.5970| Positive Crossover | Bullish
  • MA 50: 0.5936 | Positive Crossover | Bullish

Simple:

  • MA 5: 0.5993 | Positive Crossover | Bullish
  • MA 20: 0.5957 | Positive Crossover | Bullish
  • MA 50: 0.5917| Positive Crossover | Bullish

RSI (Relative Strength Index): 63.51| Buying Zone| Bullish

Stochastic Oscillator: 66.3 |Buying Zone | Positive

Resistance And Support Levels:

  • R1: 0.6036| R2: 0.6118
  • S1: 0.5977 | S2: 0.5917

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 0.6056 | Take Profit: 0.6118 | Stop Loss: 0.6017

USD/CHF:

USD/CHF moves below 0.8850 as the market perceives a cooling US labor market.

The decline of USD/CHF persists due to downward pressure on US bond yields. Bank of America predicts an increase in Fed Funds rates across the curve. The Swiss Franc strengthens amid speculation that the Swiss National Bank (SNB) might raise interest rates in the future.

The USD/CHF pair is under pressure as the market detects indications of a slowing labour market in the United States (US). This suggests that the Federal Reserve (Fed) may have completed its cycle of interest rate hikes, resulting in a depreciation of the US Dollar (USD) in the past week.

On Tuesday, attention will be directed towards the FOMC minutes, providing insights into the Federal Reserve committee’s choice to maintain rates, alongside Swiss Import and Export data.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 0.8854 | Negative Crossover | Bearish
  • MA 20: 0.8910| Negative Crossover | Bearish
  • MA 50: 0.8957| Negative Crossover | Bearish

Simple:

  • MA 5: 0.8858 | Negative Crossover | Bearish
  • MA 20: 0.8929| Negative Crossover | Bearish
  • MA 50: 0.8984| Negative Crossover | Bearish

RSI (Relative Strength Index): 29.73| Selling Zone | Bearish

Stochastic Oscillator: 3.59| Sell Zone | Negative

Resistance And Support Levels:

  • R1: 0.8904 | R2: 0.8989
  • S1: 0.8827 | S2: 0.8717

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 0.8787| Take Profit: 0.8717 | Stop Loss: 0.8837.

Elsewhere in the Forex Market

AUD/USD up 0.77% to 0.6557. The USD/CAD down 0.11% to 1.3705. The EUR/GBP up 0.05% at 0.8750. USD/JPY down 0.39% at 148.91, EUR/JPY down 0.32% at 162.69, The USD/CNY down 0.48% at 7.1759, AUD/SEK up 0.22% at 6.8696, at the time of writing.

Key Economic Events & Data Release Today:

(CNY) PBoC Loan Prime Rate (Nov) Actual 3.45%, Forecast 3.34%, Previous 4.20% at 06:45.

(EUR) ECB’s Lane Speaks at 10:30.

(EUR) German PPI (MoM) (Oct) Actual –0.1%, Forecast –0.1%, Previous-0.2% at 12:30.